How to Analyze a Fix and Flip: A Step by Step Case Study

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“I hate math!”

How many times have you muttered that frustration in your life? Even for a math nerd like me, there are times I hate math. However, if you are going to be a successful real estate investor, math is part of the package. This is perhaps most true for those looking to fix and flip a house.

When flipping, simple math errors can result in huge profit losses and discouragement.

It sucks.

However, success is not a mystery. I believe learning how to properly analyze a flip is the first step in a successful and lucrative career in house flipping – and it doesn’t have to be difficult or scary.

In today’s post, I created a video to walk you through the exact steps I use to analyze a fix and flip deal and determine how much potential profit could be made. I am going to be using the new flipping calculator from BiggerPockets, but you could do the same calculations with pen and paper if you needed to.

Take a minute and check out the video below for a step by step walk through of how I analyze this property for a potential fix and flip.

Photo: Byron Barrett

About Author

Brandon Turner

Brandon Turner (G+ | Twitter) spends a lot of time on BiggerPockets.com. Like... seriously... a lot. Oh, and he is also an active real estate investor, entrepreneur, traveler, third-person speaker, husband, and author of "The Book on Investing in Real Estate with No (and Low) Money Down", and "The Book on Rental Property Investing" which you should probably read if you want to do more deals.

21 Comments

  1. john milliken on

    very cool tool.
    was going to ask how you can eliminate the loan section, and after trying the steps, there is a cash purchase option to click that get’s rid of the loan section.
    once again, very cool tool, and very clean presentation brandon

  2. Glenn Schworm

    Great video, and very cool tool you have created. We have a very similar spreadsheet we use, but I like how yours turns to a PDF. Great stuff! With all this info on here, it is pretty tough for someone to fail! Seriously! They just need to start!! Great Job Brandon as always.

      • Glenn Schworm

        Believe me when I say…I KNOW! Those tools are so necessary and so time consuming to develop but they are so worth it. Your design of it has elevated our thoughts to a new level. We are currently setting up Salesforce for our company to operate in the cloud and we had planned on importing our spreadsheets, but after seeing what you built, we are considering doing the same in out internal system. Seriously, nice job! I know all to well how much time goes into those tools.

  3. You guys have done a great job building a very useful tool.

    I have just one small suggestion to throw out there. Everything is very professional using industry language except ‘Cash you need to have:’ Can that be changed to ‘Total Cash Investment:’ or something along those lines?

    I think it would have a bigger impact when presenting to lenders or investors.

    • Brandon Turner

      Hey Brandon, not a bad idea. I was trying to find a good way to communicate that this was the cash you had to have, and couldn’t come up with a better phrase. I like “Total Cash Investment” or maybe “Total Personal Cash Invested”- thoughts?

      • I tend to like the idea of reducing the amount of words while maintain the same message. Is there a downside to omitting the word ‘Personal’ from Total Personal Cash Invested?

        In commercial real estate we would call this category Total Cash Equity, but I think it may not be intuitive for people coming from non-real estate backgrounds and could get confused with appraisal equity.

        At the end of the day, Total Cash Investment feels like the right wording to me.

        • Brandon Turner

          Yeah, me too. The only reason I added “personal” was to differentiate between the total investment (including hard money or financing) and the money coming out of a person’s pocket. Really, something like “Wallet Investment” is what I’m trying to communicate. I’ll get some more perspective as well and we’ll see what we can do! Thanks so much for the help!

  4. Hey Brandon – Just started checking it out & will offer some feedback. I use a few different ones so will compare them. I had a problem saving to a pdf. I got a message though so you were probably aware of the problem.

  5. Ben Browning

    Awesome tool, thanks for sharing! I went ahead and developed my own excel sheet based on this just to better understand the flow and allow me to customize as needed. I used the same numbers as the video to verify.
    One issue, I can’t see how the misc closing costs calculated into the total projected profit… the numbers are telling me this was totally omitted. Using (ARV)-(total project cost)-(holding costs)-(real estate agent fee)=Total Profit, I get the same number as the video, but shouldn’t the misc closing costs have been subtracted from the total profit? Am I missing something? I’m new to all this, just trying to wrap my mind around every aspect that I can. Thanks again, I’m absolutely loving this site!

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